Outdoor financials: VF's Q4 profit plunges 30 percent, expects 'difficult' 2009, plus Jarden, Sport Chalet
VF's Q4 profit plunged 30 percent, Jarden posted a FY net loss, and Sport Chalet's Q3 same-store sales drpped 15.4 percent.
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VF’s Q4 profit plunges 30 percent, expects ‘difficult’ 2009
Lower demand and cost-cutting charges drove VF Corp.’s (NYSE: VFC) fourth-quarter profit down 30 percent. VF is the parent company of The North Face, JanSport, Eastpak and Eagle Creek.
Its net income fell to $115.9 million, or $1.05 per share for the quarter, from $164.4 million, or $1.46 per share, for the same quarter last year. The company said it spent about $41 million on a cost-cutting program during the quarter.
The negative effect of the stronger dollar on international sales caused quarterly revenue to fall 2 percent to $1.89 billion, it said.
Results met the company’s guidance, which it lowered in January, for earnings between $1 and $1.05 per share on a 2 percent revenue decline.
For the year, profit rose nearly 2 percent to $602.7 million, or $5.42 per share, from $591.6 million, or $5.22 per share, last year. Revenue rose 6 percent from $7.56 billion from $7.14 billion last year.
VF said its outdoor coalition had another “outstanding” quarter, with total revenues up 13 percent and 17 percent in constant dollars. Domestic revenues grew 17 percent in the quarter while international revenues rose 6 percent (17 percent in constant dollars).
The North Face, Vans and Napapijri brands each posted double-digit revenue gains in the quarter. Globally, revenues of The North Face brand grew 20 percent in the quarter, while global revenues of the Vans brand increased 18 percent.
Operating income for the outdoor segment rose by 7 percent and included $8.2 million in expenses related to cost reduction actions. The decline in operating margins in the quarter was due to cost reduction actions as well as a similar amount resulting from transaction-related currency fluctuations, VF added.
VF said it expects a “difficult” 2009 and said revenue and earnings will likely decline in the first quarter.
For the first quarter, the company expects earnings of $0.90 to $0.95 per share. Results include $0.20 per share of costs related to a higher pension expense and stronger dollar. VF expects revenue to fall 5 percent to 7 percent, implying sales of $1.7 billion to $1.73 billion.
The company expects 2009 earnings per share will be flat compared with the $5.42 per share reported in 2008. It estimates that 2009 revenue will fall 3 percent to 4 percent, implying sales of $7.26 billion to $7.33 billion.
VF’s board declared a cash dividend of $0.59 per share, payable on March 20 to shareholders of record as of March 10.
Jarden posts FY net loss
Jarden Corp. (NYSE: JAH), parent of Coleman, K2, Marmot and ExOfficio, recorded a significant fourth-quarter loss from charges, as well as an 8 percent drop in sales.
For the quarter ended Dec. 31, the company recorded a net loss of $170 million, or a loss of $2.28 per share, compared to a net loss of $11.2 million, or a loss of $0.15 per share, in the same period last year.
The results included a non-cash impairment charge against goodwill and intangible assets of $283 million resulting from the company’s annual impairment testing. Excluding the charges, adjusted net income was $62.7 million, or $0.83 per diluted share, for the quarter, compared to $48.9 million, or $0.64 per diluted share, last year.
Net sales for the quarter fell 8 percent to $1.4 billion compared to $1.5 billion for the same period in the previous year.
For the full year, Jarden recorded a net loss of $58.9 million, or a loss of $0.78 per share, from a goodwill charge, compared to net income of $28.1 million, or $0.38 per diluted share, in 2008. Without the charges, adjusted net income was $209 million, or $2.74 per diluted share, versus $171 million, or $2.33 per diluted share, for the previous year.
Revenue for the year increased 16 percent to $5.4 billion compared to $4.7 billion in 2008.
Sport Chalet’s Q3 same-store sales down 15.4 percent
Sport Chalet (Nasdaq: SPCHA & SPCHB) saw its third-quarter sales dip negatively, impacted by California’s weak housing trends, rising unemployment and state budget crisis, as well as unseasonably warm weather in the company’s core markets.
For the quarter ended Dec. 28, sales decreased 10.3 percent to $104.6 million for the third quarter of fiscal 2009 from $116.6 million for the third quarter of fiscal 2008. Eight new stores not included in same-store sales contributed $4.7 million in sales for the quarter, while same-store sales decreased 15.4 percent.
For the quarter, Sport Chalet said it recorded a non-cash impairment charge of $10.7 million pre-tax, or $0.76 per diluted share, related to certain stores. A tax provision of $11.6 million was also in the quarter. The combined total of the non-cash impairment charge and valuation allowance was $22.3 million, or $1.58 per diluted share.
Excluding the non-cash impairment charge and valuation allowance, as well as a non-cash impairment charge of $2.1 million pre-tax, or $0.09 per diluted share, the company’s net loss for the quarter was $10.1 million, or $0.71 per diluted share, compared to net income of $600,000, or $0.04 per diluted share, for the third quarter last year.
Including the non-cash impairment charge and valuation allowance, net loss for the third quarter of 2009 was $32.4 million, or $2.29 per diluted share, compared to a net loss of $700,000, or $0.05 per diluted share, for the third quarter last year.
Gross profit as a percent of sales was 22.3 percent compared to 30.2 percent for the third quarter of last year. Sport Chalet said the drop was a result of increased promotional activity, increased rent as a percent of sales in newer stores and increased use of its Action Pass as consumers accumulate points that allow for certain reward certificates to be used toward their purchases.
Selling, general and administrative expenses as a percent of sales increased to 27.8 percent from 26.2 percent in the same period last year.
“Given that we expect fiscal 2009 will continue to be extremely challenging, we will maintain our prudent approach toward managing all areas of the organization. As such, we have appropriately reduced our capital expenditures for the year including our store opening program and other discretionary costs,” said Craig Levra, Sport Chalet’s chairman and CEO, in a statement.
As previously announced, Sport Chalet has retained Wedbush Morgan to evaluate strategic alternatives for the company. It noted that the review process may include, among others, such alternatives as raising additional capital, amending or replacing the company’s current bank credit facility, further reducing expenses, or continuing to execute the company’s current operating plan. No timetable has been set for completion of the review.
–Compiled by Wendy Geister
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